You are comparing Stock A to stock B. Given the following information, what is the difference...
Homework Answers
Expected return=Respective return*Respective probability
Expected return of A=(0.45*12)+(0.55*-22)=(6.7%)
Expected return of B=(0.45*17)+(0.55*-31)=(9.4%)
Hence difference between Expected return =Expected return of B-Expected return of A
(9.4)-(6.7)=(2.7%)(Negative).
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